The company reported an 18.6% widening of losses for the quarter, driven by costs associated with EnteroMedics’ continued pursuit of FDA approval for its flagship Maestro device. During the quarter EnteroMedics also raised $19.9 million through an "at-the-market" equity facility.
The Maestro system uses mild electrical stimulation to activate the vagus nerve located between the stomach and the esophagus in order to help modify physiological cravings and help patients form better eating habits. The device has been on the European market since winning CE Mark approval in 2011, but the company has reported no revenue.
In total EnteroMedics reported losses of $7.5 million or 11¢ per share, during the 3 months ended June 30, 2014. That compared with losses of $6.3 million, also 11¢ per share, during the same period last year. Analysts had projected losses of 10¢ per share, but the miss didn’t drag down ETRM shares too much.
The stock was up 0.8% today, trading at $1.35 as of about 3:40 p.m. EST.
The device maker has hit a few hurdles on its path to the U.S. market. EnteroMedics submitted its FDA application in June 2013, hoping to land indication to treat obesity, metabolic diseases and other gastrointestinal disorders. The FDA last year asked the company to provide more data on its device testing and clinical data, including information on user training and post-approval studies.
The FDA has yet to deliver a final decision on EnteroMedics’ Maestro weight-loss implant, but the agency’s expert panel recently voted overall in favor of the device, although they raised concerns about the effectiveness of the nerve-stimulating device.
The FDA’s 9-member Gastroenterology & Urology Devices Panel voted 8-1 that EnteroMedics’ Maestro nerve-stimulation implant is safe and 6-2 with 1 abstention that the overall benefits outweigh the risks, but the panel split 4-5 on whether the device is effective. The FDA isn’t bound by the recommendations of its advisory panels, but the federal watchdog agency usually sides with them.